The EPA's weapon to push fuels is its ability to set blending targets that fuel distributors have to meet or risk fines. In recent months the EPA has been under fire for its efforts to enforce an E-15 (15 percent corn ethanol) blending target. However, in U.S. Appeals Court of the D.C. Circuit, it was the other half of its initiatives -- the advanced biofuels blending targets -- that were on the chopping block.

The Appeals Court ruled this week that the EPA's blending targets for a particular type of advanced biofuel -- cellulosic ethanol -- were simply infeasible. The EPA had demanded that between 2010 and 2012, 20 million gallons of cellulosic ethanol be produced. But to date almost no cellulosic ethanol has been blended into commercial fuel, and cellulosic ethanol startups have been unable to provide significant stock to blenders.

The EPA claims it has the authority to enforce blends based on the 2007 Energy Act passed under the Bush Administration, which promoted biofuels (and corn ethanol) growth.

But the Appeals court rejected [PDF] that argument calling the decision to enforce targets on refiners -- customers of the fuel producers -- rather than the producers themselves as a bizarre and unprecedented government effort.

The three-judge panel writes, "We are not convinced that Congress meant for E.P.A. to let that intent color its work as a predictor, to let the wish be father to the thought. ...Apart from their role as captive consumers, the refiners are in no position to ensure, or even contribute to, growth in the cellulosic biofuel industry ... [The EPA's message was essentially], 'Do a good job, cellulosic fuel producers. If you fail, we’ll fine your customers.'"

A key fuel industry figure, Bob Greco, the American Petroleum Institute’s director for downstream and industry operations, cheered the ruling, telling The New York Times, "There is no onus or accountability on the person who is producing the fuel. They’re incentivized to pump up their projections via press release, and make rosy estimates because there’s no skin off their back if they fail to hit those."

But the court stopped short of handing the refiners (blenders) a total victory. It still left targets regarding biodiesel from fat, waste oil, soybean oil, or other sources intact. It also left targets for sugarcane ethanol -- regarded as another "advanced" biofuel -- intact.

The Renewable Fuel Association (RFA), while disappointed about the cellulosic ethanol rejection, praised the court for not adopting a broader rollback, while defending the EPA's estimates. The RFA writes, "The EPA did not determine a reasonably achievable volume and then inflate it. Rather, it set the volume based on the best information available to it at the time."

Cellulosic ethanol remains an interesting idea. Unlike food crop ethanol, it doesn't put pressure on food prices. It in theory would bolster U.S. energy security, while minimizing the importance of oil producing states, many of which are hostile to the U.S. And by repurposing carbon-containing waste instead of burning fossil fuels, cellulosic ethanol would cut carbon emissions (versus corn-ethanol which has been shown to increase net carbon emissions, compared to petroleum).

Cellulose forms the "woody" component in most plant leaves and stems. It is harder to break down than "sugarier" plant carbohydrates. [Image Source: CUNY]

Two cellulosic ethanol startups -- Inios Bio and KiOR -- claim to be "near" commercial production, after tens of millions in startup capital. But neither company has a working commercial scale plant yet.

Other cellulosic ethanol companies -- such as Coskata, which General Motors Comp. (GM) backed pre-bankruptcy -- are still floating around, showcasing "semi-commercial" scale plants. But compared to the ambitious claims of a few years back, it would certainly seem such firms have lost a degree of their momentum.

quote: "But the Appeals court rejected [PDF] that argument call the decision to enforce targets on refiners -- customers of the fuel producers -- rather than the producers themselves as a bizarre and unprecedented government effort."

But the Appeals court rejected [PDF] that argument, calling the decision to enforce targets on refiners (customers of the fuel producers), rather than the producers themselves, a bizarre and unprecedented government effort.

quote: For the reasons set out above, we reject API’s challenge to EPA’s refusal to lower the applicable volume of advanced biofuels for 2012. However, we agree with API that EPA’s 2012 projection of cellulosic biofuel production was in excess of the agency’s statutory authority. We accordingly vacate that aspect of the 2012 RFS rule and remand for further proceedings consistent with this opinion.

That's what the PDF document concludes from the Appeal. The court doesn't seem at all opposed to what the EPA are trying to do, they're just saying that one of their targets aren't realistic and therefore is being set aside for now.